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Agricultural producer service subsidies and agricultural pollution: An approach based on endogenous agricultural pollution

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  • Xiaochun Li
  • Huanan Fu

Abstract

Agricultural producer service is an indispensable link in promoting agricultural modernization in developing countries, while agricultural pollution has become the largest source of pollution in many developing countries. Given that agricultural pollution is different from industrial pollution due to its endogenous characteristics, we linked agricultural pollution with the human capital level of labor and propose an endogenous model that reflects the agricultural pollution path, which is different from the traditional path. We studied the effects of government price subsidy, interest subsidy, and wage subsidy to agricultural producer service on agricultural pollution and other economic indicators by constructing a three‐sector general equilibrium model including agricultural producer service. We found that the rise of price subsidy for the agricultural producer service and the wage subsidy of the agricultural producer service sector would increase the output of agricultural sector and reduce the output of agricultural producer service under certain conditions, but aggravate agricultural pollution; at the same time, the rise of interest subsidy of the agricultural producer service sector would decrease the output of the agricultural sector, enhance the output of agricultural producer service conditionally, and decrease agricultural pollution. Preconditions of the three subsidies to improve national welfare have been obtained.

Suggested Citation

  • Xiaochun Li & Huanan Fu, 2023. "Agricultural producer service subsidies and agricultural pollution: An approach based on endogenous agricultural pollution," Review of Development Economics, Wiley Blackwell, vol. 27(2), pages 1177-1198, May.
    • Handle: RePEc:bla:rdevec:v:27:y:2023:i:2:p:1177-1198
    DOI: 10.1111/rode.12983
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